Comex High Grade Copper Futures (HG) Technical Analysis – September 26, 2016 Forecast

December Comex High Grade Copper futures are under pressure due to a drop in demand for higher-risk assets. Investors are being encouraged to take profits in light of weakness in the global equity markets. Lower gold prices and last Friday’s steep plunge in crude oil are also pressing copper prices lower.

Copper is getting some support on reports of fresh buying from China, however, if they decide to pull their bids, copper prices could plunge. Today’s selling pressure is coming after the market reached its highest level since August 10 on Friday.

Trading could get volatile because of an impending clash between the bulls and the bears. Bullish traders are stepping in to buy copper because of improvements in China’s economy, coupled with the lack of further monetary policy easing from the People’s Bank of China. Bearish traders are pressing the market because of a huge supply and stagnant global demand.

TECHNICAL ANALYSIS

The main trend is up according to the daily swing chart. However, we are seeing signs of a slowdown in upside momentum. A trade through the minor top at $2.2065 will signal a resumption of the uptrend. Breaking back under the former top at $2.2000 indicates the selling may be greater than the buying at current price levels.

The main range is $2.2860 to $2.0640. The retracement zone of this range is $2.1750 to $2.2010. This zone was the primary upside target and is currently providing resistance. The market is also trading inside this zone. Trader reaction to the 50% and 61.8% levels will likely determine the longer-term direction of the market.

The short-term range is $2.0640 to $2.2065. If selling pressure continues to build then its retracement zone at $2.1355 to $2.1185 will become the primary downside target.

FORECAST

BASED ON THE CURRENT PRICE AT $2.1835, THE DIRECTION OF THE DECEMBER COMEX COPPER MARKET THE REST OF THE SESSION IS LIKELY TO BE DETERMINED BY TRADER REACTION TO THE RETRACEMEN ZONE LEVELS.

A SUSTAINED MOVE UNDER $2.1750 WILL INDICATE THE PRESENCE OF SELLERS. THIS COULD LEAD TO A QUICK BREAK INTO THE UPTRENDING ANGLE AT $2.1640. THERE COULD BE A TECHNICAL BOUNCE ON THE FIRST TEST OF THIS ANGLE, BUT IF IT FAILS THEN LOOK FOR AN ACCELERATION TO THE DOWNSIDE WITH THE NEXT MAJOR TARGET COMING IN AT $2.1355.

A SUSTAINED MOVE OVER $2.2010 WILL SIGNAL THE PRESENCE OF BUYERS. THE FIRST TARGETS ARE LAST WEEK’S HIGH AT $2.2065 AND A DOWNTRENDING ANGLE AT $2.2085. TAKING OUT THIS ANGLE COULD TRIGGER A SPIKE INTO THE NEXT DOWNTRENDING ANGLE AT $2.2210.

THE MARKET IS FINDING RESISTANCE INSIDE A MAJOR RETRACEMENT ZONE AFTER A NINE DAY RALLY. UNLESS THERE IS RENEWED DEMAND FOR HIGHER RISK ASSETS OR A DROP IN THE U.S. DOLLAR, SELLERS ARE LIKELY TO GO AFTER $2.1750 IN THE HOPES OF DRIVING THE MARKET INTO A VALUE AREA. TODAY LOOKS LIKE A PROFIT-TAKING DAY FOR THE LONGS.